Author Archive

Five (More) Myths About the Highway Trust Fund

July 15th, 2015 | By: Becky Moylan

1. Devolving the federal program to the states is a viable option Devolution is the idea of eliminating the federal government’s ability to collect the current 18.4 cents per gallon in federal gasoline taxes (absent a few cents to remain dedicated toward maintaining the Interstate Highway System) and transferring all authority over these programs to the state. This act would represent one of the single greatest unfunded mandates at nearly $50 billion—a violation of the Unfunded Mandates Reform Act of 1995. The current system empowers states by making the federal role a reimbursement process, allowing states to make their own planning and building decisions while also having some overall coordination and safety standards among states. Many states have raised their own gas taxes recently, essentially catching up the purchasing power of their current gas tax rates with inflation since they were last adjusted. For example, Iowa had not raised its gas tax since 1989 and its 10-cent increase was a hard fought battle. To ask states to pick up the tab for the federal role—which on average is 52% of the state’s capital budget each year—would be a huge burden to states’ budgets. On average, states would need to raise their gas tax by 23 cents or significantly cut their transportation program. It would not be the easy task that the proponents of devolution make it out to be. Instead, our roads, bridges and transit would continue to deteriorate and the backlog of projects would grow longer and the system will become patchwork if some states fail to make investments. 2. Transportation has become a partisan issue Transportation has historically been a bipartisan issue, and passing a multi-year, properly funded transportation bill will only be accomplished through bipartisan cooperation. In the past year, there have been several bipartisan proposals to help address the Highway Trust Fund crisis. Senators Bob Corker (R-TN) and Tom Carper (D-DE) have proposed a plan. In the House, Reps. Renacci (R-OH), Pascrell (D-NJ), Ribble (R-WI), and Lipinski (D-IL) have introduced the Bridge to Sustainable Infrastructure Act.  Before the Independence Day Recess, the Senate Committee on Environment & Public Works unanimously passed the DRIVE Act out of committee. Both sides of the aisle acknowledge that our transportation system is ailing and that something must be done. Fixing the Highway Trust Fund is, at its heart, a bipartisan endeavor. 3. Flat funding is fine If Congress does not grow the program and increase federal funding levels in the next multiyear transportation bill, then our economy will continue to suffer. In 2011, ASCE released an economic study on transportation titled Failure to Act, which details how underinvesting in transportation is a drag on our economy. The study outlined what the economic ramifications will be by 2020 if status quo funding levels continue. Among them, we revealed that America’s GDP will underperform by $897 billion in total by 2020 and each family’s budget loses $1,060 each year in disposable income—money every American household has already lost and will continue to lose if we don’t improve our transportation network. Underinvestment in transportation will cost our economy 877,000 jobs in the year 2020.  Continuing to fund at current levels for the next several years will neither improve our aging transportation network, nor grow the economy 4. A gas tax is not politically possible Several states have recently acted in bipartisan fashion to pass gas tax increases. In those states, 90% of those who voted in favor the gas tax increase got reelected in the following election. And many were conservative states, like Arkansas, which needed to see a high return on investment. A poll by the Mineta Transportation Institute demonstrated that people are willing to pay more in gas taxes if it goes to improving transportation. This study shows that voters recognize the connection between potholed roads and aging bridges and underinvestment. In addition, the impact of a gas tax on gas prices is not as direct as sometimes thought. A recent study by ARTBA finds that gas tax increases have very little impact on the overall price of a gallon of gas. CBO projects that the Highway Trust fund’ revenue shortfall will be $8 billion at the end of this year and be between $85 billion and $90 billion by May 31, 2021. There is no reason to add to the national debt and our burden on future generations when raising the gas tax is a deficit-neutral options. 5. We can kick the can again Two-month stopgaps hurt the economy and American business. For two consecutive years, the summer highway and transit construction season has taken a hit because of the uncertainty surrounding the federal program.  For example, just in the last few weeks and months, several states have announced they are canceling or delaying projects until Congress passes a multi-year bill. These short-term extensions not only delay existing projects in the pipeline but prevent major projects from being considered in light of the lack of a clear federal funding commitment. Ultimately the lack of certainty hinders our nation’s ability to dream big on ways to modernize our infrastructure and create the foundation for the 21^st century economy.   See the original posts 10 Myths About the Highway Trust Fund. 

No Comments »